VR Is Ailing In China

Those who believe that virtual reality (VR) will be the future of the technology world may need to think again.

In early February, Facebook reportedly closed down 200 of its 500 Oculus virtual reality demo stations, cutting 40% of its presence in the United States.

Similarly, the business in China, after a wave of hype surrounding VR, is also undergoing a difficult time, as shoddy and deceptive gadgets filled the markets, casting a cloud over this emerging technology.

Since 2016, VR has become a buzzword among venture capitalists. Many startup companies began to produce VR hardware, with others focusing on developing VR content.

In China, however, the market is not dominated by high-priced gadgets that many believed would represent the future of technology. According to media reports, over 90% of consumers buy VR boxes that cost less than 100 yuan (US$ 14.6), mostly churned out in small workshops at a cost of only around 10 yuan (US$ 1.46).

These low-end VR boxes are simple in structure – two special optical lens covered by a plastic box make up a seemingly advanced gadget that is able to give you a new visual experience.

From excitement to disappointment

As more and more shoddy VR headsets flood the market, customers are gradually losing interest, and excitement has turned into sheer disappointment.

"Can't believe this is the so-called virtual reality, cuz its experience is really bad," commented a user on the internet.

When the headsets were first introduced on the market, many customers stopped and tried them, confessed the owner of a small store at an electronics mall in China's southern city of Shenzhen. But now, no one seems to show any interest.

Instead, the once trendy gadgets have become promotional gifts, according to research by the Beijing News.

Most of the demand comes from corporate customers who present VR gadgets to their employees. "Sometimes they serve as giveaways in place of cellphones or food," said A-Qiang from a VR box producer. "Once, a construction foreman even ordered a batch of VR boxes for his workers."

As the prototype of VR box, Cardboard was first invented and launched by Google in 2014. As there is little technical knowhow in it, the search engine giant did not develop it into a business but made all of the technology open.

Small Chinese workshops sniffed out the "opportunity" and made a big thing out of it.

A research report shows that total sales of VR devices produced by big global companies like Sony and HTC were 6.3 million in 2016. But for a small workshop in China's southern city, the monthly shipment is usually over 300,000.

"Frankly speaking, they are all cheap goods with no future, and we only produce them for money," said Mr. Liu, owner of a small factory that produces straps for the VR box.

As Chinese people lose interest, some manufacturers have turned their eyes overseas.

Now, most of the orders come from foreign customers, especially from Southeast Asia, Europe and America, said A-Qiang.

As developing countries in Southeast Asia and South Asia still lag behind China in technological sophistication, customers are more easily get hooked by these kinds of gadgets. While in developed Western countries, shoddy VR boxes may come in handy to fill the shelves in "one dollar stores".

A premature death?

As was the case with smartphones, smartphone chargers and fitness trackers, once a price war begins, there is no way out for the manufacturers but to reduce their costs.

"As they become cheaper, all of those gadgets turned into electronic rubbish with no one interested in buying them", said Wang Huan, vice president of Zhongsou Investments, a venture capital firm.

Cheap VR boxes flooding into the market is like a double-edged sword. More people know about the new technology, but most of them don't have a very good experience. Many VR startups are beginning to worry that this may end up ruining the industry's future.

"This may certainly bring some problems as advanced VR boxes are introduced to the market in the future," said Wang. "But as long as the product can achieve better user experience and cost-performance, users may somehow regain interest."